MCESA draws positive audit, business office being restructured

Published 6:00 am, Sunday, November 20, 2011

The Midland County Educational Service Agency has received an "unqualified" audit for the year ended June 30, and is moving to address a few concerns raised by the auditor.

The MCESA Board of Education accepted the Rehmann Robson audit at its meeting on Tuesday.

"We had a great audit," MCESA Superintendent John Searles said in an interview. "But there are a couple of things we need to improve, related to not having enough staff."

In a letter to the board, Rehmann raised two internal control issues, but noted that it did not find "any deficiencies in internal control that we consider to be material weaknesses."

One issue is about "lack of review within the payroll department. We observed that one employee was able to input employee rates and hours into the payroll system, process the payroll, and produce the checks to the employees. These procedures were all being done without proper review of the payroll registers prior to the payroll being processed."

MCESA responded that periodic reviews prior to payroll being issued "were completed throughout the year, however not on a consistent basis." As part of MCESA business office restructuring, the Saginaw Intermediate School District is currently processing MCESA's payroll.

Searles said having one person inputting employee rates and hours, processing the payroll and producing checks was a result of, over time, reducing staff "to the point that we don't have the staff to do that separation" of duties that the auditor recommended.

Rehmann also found some errors in general ledger reporting, including "having to adjust payroll runs due to incorrect payroll taxes being taken out of the employees' pay checks, incorrect transfers of payroll wages to bank accounts and delays in transferring of funds to proper retirement accounts." The auditing firm noted that the district subsequently corrected all errors and compensated employees for lost wages or interest.

MCESA said it was confident that fewer inaccuracies will occur under the restructuring.

The MCESA board on Tuesday approved the restructuring, which involves adding 1.3 full-time equivalent positions - making the HR and Business Services administrative assistant full-time and adding a new, full-time accounting specialist position.

"We want to make sure we're doing the absolute best for our business services that we offer," Searles said.

The administrative assistant position previously was a 0.7-time position; she now will spend all of her time on HR and business services.

Part of the issue has been the proliferation of grants, Searles said. "We continue to pull in grants. The accounting for that is very tedious, not only in creating grants but also the reporting you do intermittently, and the final reports."

The agency has applied for a number of additional grants in areas including early childhood education, Searles said, making the accounting specialist position even more necessary in order to "do all the secondary levels of reporting."

For the year ended June 30, MCESA had total revenues of $24.33 million and total expenditures of $23.32 million, allowing the agency to add more than $1 million to its fund balance. Its end-of-year fund balance was $6 million.

Also at Tuesday's meeting, the board gave its quarterly review of the superintendent's performance.

"I think we're in a pretty decent position," Searles said. "The board seems pretty satisfied with where we are, and we're moving ahead."